Bridgelux Wins $25M From China for GaN LEDs on Silicon Substrates

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

In October of last year, Bridgelux closed $15 million to accelerate research and development of the firm's gallium-nitride-on-silicon LED chip technologies for general illumination applications. Funding came from VantagePoint Capital Partners, DCM, El Dorado Ventures, Novus Energy Partners, IFA, Chrysalix, Harris & Harris Group, Craton Equity Partners, Jebsen Asset Management, and Passport Capital, et al.

Today the firm announced that it has won an additional $25 million from Kaistar Lighting of Xiamen, China.

Building a solid-state lighting (SSL) firm turns out to be expensive -- Bridgelux is at the $225-million-of-VC-invested mark. Other SSL firms such as Luminus Devices have also been less than capital-efficient.

But going after $100 billion markets is not for the weak of heart -- or wallet.

According to the Bridgelux CEO, Bill Watkins, the firm generated $32 million in revenue in 2010 and hit about $80 million in 2011. The firm's October 2011 funding was directed at making a specific shift in technology: moving from four-inch sapphire substrates to eight-inch silicon substrates.

Alan Salzman of VantagePoint Venture Partners, an investor in Bridgelux as well as LED bulb firm Switch, has told Greentech Media that he sees a transformation occurring in lighting, with everything switching out to solid-state lighting and causing "a $100 billion industry to flip." In Salzman's view, the mammoth lighting incumbents like Philips, GE and Osram "might catch up -- or might not."

Factors holding back LED lighting for general illumination include light quality and cost, as light bulbs show tremendous price elasticity. But LED light pricing is dropping fast. And light quality continues to improve.

Stay tuned for some big lighting news later this week. Note that Soraa, another LED lighting firm, unstealthed last week. We also reported on profitable and growing LED systems firm Albeo last week.

But Bridgelux's silicon LEDs could cut the cost of solid-state lighting, since LED chips account for more than half the cost of a bulb. Manufacturers have tried to grow LEDs on silicon for years with mixed success.

2012 could be the year that solid-state lighting finally makes its move into general illumination and topples the long-entrenched incumbents.